LIBRARY 

OF  THE 

UNIVERSITY  OF  CALIFORNIA. 


GIFT  OF" 


n 


I 


IW 


-4*0.  D. 


THE  VERSATILITY 

OF  AN 

INSURANCE  CAREER 


BY 


F.  W.  P.  RUTTER 


MANAGER,  LONDON  AND  LANCASHIRE  FIRE  INSURANCE  CO. 
LIVERPOOL 


PRESS    OF 

MONTROSS,   CLARKE   &   EMMONS, 
51    NASSAU  STREET,  N.  Y. 


tHti 


THE  VERSATILITY  OF  AN   INSURANCE 
CAREER. 


44  To  look  at  things  as  well  as  vje  can— to  in- 
scribe them  on  our  memory— to  be  observant  and  lei 
no  day  pass  'without  gathering  something — then  to 
apply  oneself  to  those  branches  of  knowledge  which 
give  the  mind  a  sure  direction— to  apportion  everything 
its  place — to  assign  to  everything  its  value  (in  my 
opinion  a  genuine  philosophy  and  a  fundamental  mathe- 
sis)—this  is  "what  ive  have  novj  to  do." 


THESK  words  of   Goethe   form  the  kernel  of  what 
I   propose    to    submit    for   your   indulgent   con- 
sideration to-night. 

When  you  did  me  the  honour  to  invite  my  ap- 
pearance before  your  Society,  and  when  it  was  intimated 
that  there  would  be  no  restrictions  in  the  selection  of 
a  subject,  I  felt  it  would  perhaps  be  not  altogether 
uninteresting  to  you,  and  certainly  a  benefit  to  myself, 
if  I  were  to  attempt  a  survey  of  the  manifold,  the 
kaleidoscopic,  vareity  of  interests,  which  are  bound 
up  with  the  life  and  work  of  an  underwriter,  and 
the  study  of  which  must  be  both  enjoyable  and 
instructive  to  every  aspirant  to  insurance  honours. 


After  framing  in  my  mind  the  skeleton  of  ideas 
which  the  subject  conjured  up,  and  so  as  to  avoid 
ground  already  familiar  to  you,  if  that  were  possi- 
ble, I  had  access  to  some  of  the  papers  which  have 
already  been  read  before  your  Society,  bearing  in 
several  instances  the  names  of  some  of  the  most 
distinguished  amongst  the  leaders  of  our  profession. 
Of  these,  I  was  particularly  attracted  and  impressed 
by  the  paper  read  to  you  twelve  months  ago  by 
one  of  your  own  countrymen,  who  has  not  only 
won  for  himself  an  imperishable  insurance  reputa- 
tion, but  who  excels  as  a  profound  thinker,  a  class- 
ical scholar,  and  a  polished  rhetorician.  He  told 
you,  from  the  stores  of  his  experience,  the  beneficent 
advantages  of  philosophy  and  of  moral  culture  to  a 
business  man.  He  explained  to  you — as  with  the 
authority  of  one  who  has  passed  successfully  through 
the  turmoil,  the  anxieties,  the  ups  and  downs  of 
an  active  business  life  to  the  quietude  of  a  happy 
retirement,  so  helpful  to  a  calm,  unfettered  survey 
of  the  past — how  a  man's  daily  work  may  be 
elevated  and  refined  by  a  firm  adherence  to  principle 
and  by  the  exercise  of  that  philosophy  which  softens 
the  too  glaring  dazzle  of  success,  and  gives  a  silver 

2 


lining  to  the  dark  cloud  of  failure  and  discourage- 
ment. 

To-night — I  confess  with  some  trepidation  at  the 
ambition  of  following  in  such  footsteps — I  take  this 
lofty  sentiment  as  the  basis,  the  foundation,  of  my 
remarks,  and  will  try  to  picture  to  you  the  multi- 
tudinous elements,  the  masses  and  the  fragments  all 
lying  heaped  together,  but  which,  combined  in  pro- 
portion and  with  judgment,  may  be  fashioned  into 
the  structure  of  an  insurance  expert's  career. 

For  our  business  is  a  mosaic,  composed  of  so 
many  pieces  of  different  material,  and  of  such  vari- 
ety in  size  and  shape,  that  it  is  difficult  to  imagine 
how  these  many  apparently  inharmonious  elements 
can  be  made  to  fit.  It  is  necessary,  therefore,  that 
one's  mind  should  approach  the  subject  broadly  and 
generously,  that  we  should  be  free  for  the  nonce 
from  the  technicalities  of  our  daily  occupation,  and 
see  whether,  not  only  business  life  per  se,  but  our 
own  particular  profession,  is  not  capable  of  being 
similarly  elevated  to  a  higher  plane. 

I  propose,  then,  to  touch  a  few  chords,  lightly 
and  suggestively,  indicating  the  variety  of  pursuits 
open  to  any  Insurance  man  who  has  an  enthusiastic 

3 


interest  in  his  business,  and  who  is  wishful  to  com- 
bine them  to  his  advantage.  For  one  cannot  but 
acknowledge  that  the  greater  the  experience  of  the 
world,  and  the  business  acumen  possessed  by  the 
underwriter,  the  more  fitted  he  must  be  to  bring 
to  bear  upon  his  work  that  judgment,  that  fine 
discrimination,  which  are  so  continuously  called  for. 
It  has  often  occurred  to  me  that,  perhaps 

THE   HIGHEST   QUALIFICATION  OF  AN  UNDERWRITER 

is  the  power  of  making  up  his  mind,  and  making 
it  up  both  rapidly  and  accurately.  He  must  not  waste 
time  over  it — he  must  not  keep  other  things  waiting; 
he  must  cleave  his  problem  to  the  core,  examine  it 
minutely,  and  then  give  his  decision  promptly  and  con- 
clusively once  for  all.  It  does  not  matter  whether 
the  anxious  question  is  that  of  the  opening  of  an  agency, 
of  the  retirement  from  a  country,  or  the  abandonment 
of  a  treaty,  or  whether  it  shall  be  mending  rather 
than  ending;  of  the  selection  of  an  official,  of  the 
acceptance  of  a  risk,  or  of  the  many  other  ques- 
tions which,  from  time  to  time,  arise  like  Hydra  to 
puzzle  the  brains  of  officials.  All  demand  the  same 
nicety  of  treatment  and  clearness  of  judgment,  so 
that  when,  years  after,  that  same  subject,  however 

4 


small  and  insignificant  it  may  have  appeared  at  the 
outset,  becomes  lit  up  with  the  search-light  of  some 
exciting  incident,  one  may  have  the  keen  satisfaction 
of  feeling  that — whatever  the  outcome,  whether  good 
or  ill — that  decision  was  the  right  one. 

It  is  easy  enough  to  say,'  afterwards,  what  would 
have  been  the  right  thing  to  do,  because  then  the 
question  is  illumined  by  the  after  event,  and  by 
the  more  exhaustive  and  deliberate  thought  which 
one  can  naturally  give  to  it.  But  it  is  the  first 
judgment  which  must  be  sharp  and  accurate,  because 
upon  it  so  much  may  depend. 

The  more  one  knows  of  a  subject  and  of  the 
many  side-lights  which  assist  in  the  formation  of  a 
judgment,  the  more  competent  one  becomes  to  arrive 
at  an  accurate  conclusion. 

Knowledge  is  power :  it  constitutes  the  expert. 
And  the  true  expert  must  be  a  specialist ;  he  should 
not  be  content  with  the  generalising  of  the  ordinary 
practitioner,  but  he  should  qualify  as  an  authority 
on  as  many  subjects  as  possible,  with  proper  discrim- 
ination, choosing  those  only  that  are  likely  to  be  of 
value,  and  the  result  will  be  a  more  polished  personality, 
as  well  as  a  more  complete  insurance  encyclopaedia. 

5 


A  thoughtful  journalist  once  termed  Insurance, 
comprehensively,  as  both  esoteric  and  exoteric.  Eso- 
teric because  it  appeared  to  him  to  be  a  science 
only  understood  by  the  specially  initiated,  the  ex- 
perts ;  but  yet  exoteric,  because  capable  of  being 
imparted  to  and  comprehended  by  others.  He  was 
right;  and  having  himself  since  entered  the  ranks 
of  the  Insurance  profession,  he  has  doubtless  proved 
to  his  satisfaction,  ere  now,  one,  if  not  both,  of  these 
definitions. 

Insurance  an  Insurance  has,  indeed,  every  claim  to  the 
Inductive  Science*  title  of  an  inductive  science,  a  science  which 
calls  for  one's  best  reasoning  powers — the  daily  draw- 
ing of  inferences  and  conclusions  by  the  microscopic 
examination  of  all  such  obtainable  data  as  will  help  to 
throw  light  upon  the  problem,  whatever  it  may  be. 
Science  is,  after  all,  but  "the  systematic  classification 
of  experience."  As  Huxley  said,  "It  is  nothing 
but  trained  and  organised  common-sense"  The 
premises  must  be  true,  the  reasoning  without  bias 
or  prejudice,  and  the  conclusion  such  as  will  stand 
the  test  of  subsequent  events.  The  underwriter  is 
called  upon  from  hour  to  hour  to  apply  the  mass 
of  general  facts  and  statistics  accumulated  in  the 

6 


course  of  his  experience,  and  to  focus  them  upon 
his  particular  difficulty.  But  this  must  be  done  with 
unerring  judgment,  because  the  set  of  factors  em- 
ployed must  obviously  vary  with  every  separate 
case. 

Statistics  above  all  are  the  underwriter's  sheet 
anchor.  And  yet  we  frequently  hear  the  phrase 
that  figures  can  be  made  to  prove  anything.  So 
they  can,  if  they  are  confined  to  one  side  of  the 
question  only,  but  the  careful  underwriter  will  see 
that  the  figures  from  which  he  makes  his  deductions 
are  sufficiently  faithful  and  complete  to  be  relied 
upon. 

But  beyond  even  statistics,  there  must  be  that 
keen,  sympathetic,  sensitive  judgment,  amounting 
almost  to  an  instinct,  which  so  often  comes  into 
play,  to  confirm,  or  perhaps  to  negative,  what  the 
figures  seem  to  indicate.  It  is  like  the  philoso- 
pher's stone  of  the  alchemist,  which,  applied  with 
discretion  and  at  the  proper  moment,  turns  into  gold 
the  particular  transaction.  It  is  this  faculty — the 
final  touch  of  some  deep  thought,  or  the  moral 
derived  from  some  vital  incident,  and  often  put  into 
effect  in  the  face  of  otherwise  convincing  statistics — 

7 


which  has  had  such  a  large  share  in  the  composi- 
tion of  some  of  our  greatest  underwriters. 

And  yet  it  would  not  be  right  to  suggest  that 
the  science  of  Insurance  is  so  occult  that  its  secrets 
are  attainable  only  by  a  favoured  few  who  have 
entered  the  world  as  ''born  underwriters."  There 
is  nothing  in  our  business  which  cannot  be  learned 
by  patient,  unwearying  application  and  perseverance. 
That,  indeed,  is  the  charm  of  our  profession.  Any 
science  which  takes  a  lifetime  to  learn  must,  if  pur- 
sued with  enthusiasm,  be  a  continual  source  of 
pride,  and  of  intrinsic  value — so  much  invested  cap- 
ital— to  the  possessor. 

Carlyle  knew  the  value  of  incessant  study  when 
he  wrote: — "There  is  a  perennial  nobleness,  and 
even  sacredness,  in  work.  Were  he  ever  so  be- 
nighted, forgetful  of  his  high  calling,  there  is 
always  hope  in  a  man  that  actually  and  earnestly 
works. ' ' 

A  clever  underwriter,  then,  must  be  a  man  of 
genius:  by  which  I  mean  either  a  man  of  excep- 
tional gifts  and  intuition,  or  (in  the  application  of 
that  other  definition)  a  man  of  "energy,  labour, 
and  diligence," — "with  a  transcendent  capacity  for 

8 


taking  trouble  first  of  all."  Indeed,  it  is  very 
doubtful  whether  this  taking  of  pains  can  be  dis- 
pensed with  by  anybody  in  our  business.  The 
omission  to  give  due  weight  to  one  single,  and  per- 
haps apparently  insignificant,  fact,  may  involve  con- 
sequences causing  deep  regret  and  chagrin. 

We  are  often  struck  by  the  completeness  and 
perfection  of  some  chef  (Toeuvre,  whether  a  book, 
or  a  speech,  or  a  picture.  Occasionally — rarely — the 
artist,  a  Byron  or  a  Herkomer,  may  have  dashed 
off  his  work  with  lightning  rapidity ;  but,  as  a 
rule,  the  apparently  perfect  work  or  the  inspired 
pronouncement  is  but  the  result  of  infinite  patience 
and  care. 

The  same  guiding  principle  of  unremitting  atten- 
tion to  details  must  govern  us  if  we  are  to  achieve 
sound  results ;  and  it  cannot  but  be  an  encourage- 
ment and  an  incentive  to  the  tyros  in  our  profession 
to  feel  that  there  is  no  roj7al  road  to  success,  but  that, 
by  saturating  themselves  with  their  daily  business 
and  by  utilising  such  by-studies  as  are  likely  to 
enrich  their  Insurance  experience,  there  is  no  reason 
why  they  should  not  attain  to  the  highest  rungs  of 
the  ladder.  The  first  step  is  generally  the  most 

9 


difficult,  but  once  attained  it  affords  a  firm  fulcrum 
for  further  progress.  You  remember  that  it  was  as 
a  corporal  (not  as  a  private)  that  Napoleon  first 
attracted  attention ;  and  we  have  at  all  times  been 
encouraged  by  the  declaration — as  true  in  our  bus- 
iness as  in  his —  that  '  *  every  corporal  carries  a  field- 
marshal' s  baton  in  his  knapsack."  Our  Insurance 
history  comprises  more  than  one  Napoleonic  instance 
of  that  insatiable  thirst  for  new  fields  to  conquer 
which  was  the  burning  characteristic  of  that  original 
and  unequalled  amalgamator. 

Wnaloav  Between      Glancing  the  other  day  over  the  columns  of 
Banking  a  banking  journal,  I  came  across  the  dogma 

and  Insurance.  ^^  < «  science  has  now  supplanted  crude  con- 
jecture, and  expert  knowledge  has  taken  the  place 
of  mere  guess-work." 

This  may  also  be  applicable  to  banking,  but  it 
is  certainly  so  to  Insurance ;  and  indeed  there  is  a 
good  deal  of  analogy  between  the  banking  profession 
and  our  own ;  they  have  a  natural  affinity  for  each 
other.  You,  in  the  North,  are  aware  at  least  of 
one  instance  where  a  successful  banker  has  become 
a  clever  actuary,  and  vice  versa.  For  Insurance  is, 
like  banking,  a  necessity  :  it  is  no  longer  a  luxury, 

10 


but  has  become  an  absolutely  essential  factor  in  the 
world's  commercial  machinery.  Can  you  imagine 
what  would  be  the  effect  of  the  suspension  of  all 
Insurance  policies,  say,  in  the  great  Metropolis,  or 
in  your  own  city,  for  a  single  day ;  the  dislocation 
that  would  ensue,  the  violation  of  contracts  as 
between  mortagor  and  mortagee,  carrier  and  con- 
signee, buyer  and  seller,  merchant  and  broker?  How 
many,  or  rather  how  few,  are  there  who  have  not 
responsibilities  and  obligations  to  some  other  party ; 
and,  whatever  may  be  their  inclination  as  regards 
their  own  liability,  the  risks  which  they  themselves 
are  running,  these  obligations  to  others — often  of 
great  and  even  unknown  extent — must  be  covered 
if  the  daily  routine  of  their  business  is  to  go  on 
without  interruption. 

It  is  sometimes  said  that  we  Insurance  men  sell 
our  goods,  like  shopkeepers ;  and,  this  being  a 
"nation  of  shopkeepers,"  we  might  not  unreasonably 
accept  the  epithet  as  applying  to  ourselves.  But  is 
it  quite  correct?  Are  we  not,  rather,  like  bankers, 
trustees?  We  are  entrusted  with  so  much  money 
by  so  many  individuals,  and  out  of  that  money  we 
pay  our  expenses  and  guarantee  to  refund  from  the 

ii 


store  of  our  reserves — of  the  money  which  has  been 
entrusted  to  and  fructified  in  our  keeping — whatever 
fire  losses  may  occur  to  the  property  insured.  We, 
naturally,  always  endeavor  to  secure  for  ourselves 
a  small  margin  of  profit  for  our  trouble  and  work — 
just  the  same  as  the  banker  does  on  the  turnover 
of  his  client's  accounts ;  but  the  bulk  of  our  divi- 
dends are,  like  those  of  the  banker,  derived  from 
the  judicious  investment  of  the  securities  in  hand, 
and  which,  fortunately,  in  the  case  of  the  Insurance 
Companies,  largely  consist  of  the  accumulated  profits 
of  past  years. 

There  are  those  who  still  regard  a  life  policy, 
and  even  a  fire  policy,  as  they  would  a  summer 
overcoat — occasionally  useful,  but  generally  supererog- 
atory ;  but,  in  the  enormous  and  increasing  number 
of  insured  (not  one  of  whom  is  inclined  to  spend 
money  if  he  can  possibly  save  it),  they  have  con- 
stant demonstration  that  Insurance  has  not  only 
come  to  stay,  but  that  year  by  year  the  number  of 
the  elect  must  inevitably  expand. 

Undoubtedly  the  prestige  attaching  to  the  name 
of  a  British  Company  was  forged  and  burnished  in 
the  furnace  of  the  Chicago  and  Boston  fires  a 

12 


,ITY 


quarter  of  a  century  ago.  For  the  Chicago  con- 
flagration alone,  the  amount  paid  was  over  50  million 
gold  dollars,  of  which  the  British  offices  contributed 
about  one-fifth,  and  it  must  always  remain  as  a  per- 
manent testimony  to  the  solidity  and  resources  of  the 
British  offices  that,  whilst  there  were  many  companies 
unable  to  meet  their  indebtedness,  there  was  not  a 
single  Company  hailing  from  this  country  which  did 
not  respond  for  every  dollar  of  its  liabilities.  For- 
tunate were  they  in  having  so  husbanded  their 
profits  as  to  be  able  to  meet  the  blow  with- 
out default.  Such  an  expenditure  was  well  en- 
titled to  the  unprecedented  testimonial  which  it 
earned,  and  the  credit  of  the  British  Insurance  Com- 
pany still  rises-  higher  and  higher. 

. .  Conflagrations  are  unquestionably  the  salt  of 

Of  our   business ;     without    them    it    would    lose 

Conflagrations,  half  its  charm.  They  are  our  fertilisers: 
they  impart  new  life  and  vitality  into  ground  which, 
perhaps,  has  been  getting  sodden  and  stale ;  they 
stimulate  growth ;  they  are  like  ' '  bread  thrown  on 
the  waters,"  coming  back  to  us  again  a  hundred- 
fold. They  constitute  the  finest  advertisement — the 
strongest  vindication  which  a  Fire  Insurance  Company 

13 


can  possibly  desire.  They  demonstrate  to  the  laity, 
to  those  outside  the  pale  of  our  profession,  that, 
whatever  immunity  we  may  enjoy  for  a  time — whether 
it  is  for  five  or  ten  years — we  are  never  safe  from 
the  possibility  of  a  fire  which  may  cut  a  large  slice 
out  of  a  great  city.  And  this  liability  is  just  as 
applicable  to  this  country  and  this  hemisphere  as  it 
is  to  the  great  countries  over  the  seas.  Formerly, 
we  used  to  think  that  a  conflagration  was  only 
probable  in  a  timber  town ;  and  yet,  although  in 
the  course  of  years,  these  flimsy  places  have  been 
gradually  minimised  in  their  number  and  extent,  we 
have  the  conflagrations  still  present  with  us,  as  fre- 
quent and  as  vehement  as  ever.  Timber  has  been 
replaced  by  brick,  but  this  improvement  has  been 
offset  by  the  crowding  and  over-crowding  of  our 
large  towns  where  we  have  now  to  study  the  mul- 
titude of  congested  districts,  with  narrow  streets, 
high  and  old  buildings — often  containing  enormous 
values  of  light  and  dangerous  merchandise — which, 
once  a  fire  has  got  well  alight,  form  as  fine  and 
unlimited  a  bonfire  as  ever  did  any  town  of  frame 
construction. 

We   may,    and   do,    take   precautions.        We    have 


the  facility  of  the  telephone,  and  of  the  electric 
alarm  if  we  take  the  trouble  to  instal  it ;  both  of 
vital  utility  in  calling  up  the  Brigade,  a  matter  of 
paramount  importance,  seeing  that  it  is  the  first  ten 
minutes  which  will  decide  whether  the  fire  is  to  be 
stopped  in  its  incipiency  or  whether  it  is  to  gather 
strength  which  may  grow  into  a  conflagration.  We 
have  our  enlarged  Fire  Brigades,  our  modern  appli- 
ances, our  automatic  sprinklers,  our  supplies  of  water 
of  unlimited  capacity ;  and  yet,  with  all  these  helps, 
we  know  that  we  are  never  safe.  L,et  there  be  one 
link  missing  from  the  chain,  and  all  our  calcula- 
tions are  upset.  Was  not  the  immense  destruction 
caused  by  the  St.  John's,  Newfoundland,  fire  due  to 
the  fact  that  •  the  water  supply  of  the  town  had 
been  temporarily  cut  off  to  allow  of  some  repairs 
being  carried  out?  And  St.  John's  was  only  an 
illustration  of  what  may  occur  anywhere  at  any 
time.  What  power  on  earth  can  stop  a  fire  well 
alight  in  two  or  more  warehouses  in  a  congested 
district  with  a  hurricane  blowing?  How  often  has 
it  happened  that  a  serious  conflagration  was  only 
averted  by  the  dropping  of  the  wind,  or  its  veering 
round  to  another  quarter? 

15 


We  cannot,  therefore,  evade  the  conflagration, 
and,  indeed,  it  is  doubtful  whether  we  should  really 
benefit  if  it  could  be  removed  from  our  path.  It 
is  incidental  to  our  business ;  it  is  the  necessary 
vindication  for  our  Reserve  Funds ;  it  affords  abund- 
ant food  for  the  introspective  study  of  the  thought- 
ful underwriter. 

Sometimes  the  blow  comes  with  a  startling 
cruelty  at  the  moment  when  we  are  enjoying  the 
prospect  of  reporting  some  splendid  return — some- 
times when  we  have  already  been  suffering,  as  we 
think,  unduly,  and  when  we  are  apt  to  echo  Job's 
lament,  "For  the  thing  which  I  greatly  feared  is 
come  upon  me,  and  that  which  I  was  afraid  of 
is  come  unto  me.  I  will  complain  in  the  bitter- 
ness of  my  soul." 

But  what  would  our  Fire  Insurance  history  be 
without  conflagrations?  If  they  were  barred  the 
obvious  result  would  be  an  intensifying  of  competi- 
tion consequent  upon  the  greater  security,  and  an 
inevitable  slipping  down  of  rates  until  our  business 
and  our  profits  reached  the  vanishing  point.  Once 
make  profits  easy  and  they  are  done  for.  It  is 
curious  how,  presumably  in  comformity  with  some 

16 


mathematical  law,  these  great  fires,  periodically,  and 
with  fair  regularity,  come  to  waken  us  from  the 
lethargy  which  may  result  from  over-confidence. 
Each  decade  has  cut  its  notch  in  the  conflagration 
record,  and  it  is  a  remarkable  fact  that  nearly  every 
such  fire  of  serious  moment  has  occurred  in  one  of 
the  closing  months  of  the  year. 

In  1861,  Tooley  Street;  in  October,  1871,  Chi- 
cago; in  November,  1872,  Boston;  in  December, 
1882,  Wood  Street;  in  1892,  St.  John's;  and  last 
year,  in  October,  that  interesting  fire  in  Ecuador, 
which  threw  a  lurid  glare  upon  a  little-known  sec- 
tion of  the  western  hemisphere,  and  produced  one 
of  the  most  puzzling  problems  in  currency  and  finance 
which  the  joint  acumen  of  bankers  and  underwriters 
has  ever  had  to  deal  with.  As  I  write  these  very 
lines,  on  the  night  of  the  igih  November,  1897,  a 
fateful  orange-coloured  envelope  is  placed  in  my 
hand,  the  missive  announcing  that  the  fire-fiend  has 
had  sway  in  the  heart  of  London  for  eight  con- 
secutive hours,  and  swept  out  of  existence  more 
than  ninety  warehouses ;  and  the  Cripplegate  fire  is 
now  on  record  as  one  of  the  most  notable  conflagra- 
tions since  the  historic  holocaust  of  1666.  What 

17 


would  those  owners  and  occupiers  do  for  their  daily 
bread  if  they  had  not,  to  a  considerable  extent 
at  least,  protected  themselves  against  this  ever  pos- 
sible contingency?  If  they  have  so  safeguarded 
themselves,  they  are  entitled  to  their  share  of  the 
funds  which  have  been  contributed  for  this  very 
purpose.  Fortunately  for  all  of  us,  the  times  have 
lately  been  so  propitious  that  we  can  bear  such  a 
blow  without  a  tremor,  and,  however  the  burden 
may  be  distributed,  Fire  Insurance  in  this  country, 
in  the  aggregate,  is  built  on  too  solid  a  basis  for 
any  fire  that  ,is  not  really  unprecedented  to  cause 
alarm. 

A  great  Roman  philosopher  who  was  apt  to 
probe  accurately,  if  cynically,  into  the  depths  of 
weak  human  nature,  has  placed  on  record  this  re- 
flection : — ' '  How  fascinating  it  is  for  one  safe  on 
land  to  witness  the  perils  of  those  battling  with 
the  waves !  Not  from  any  malicious  pleasure  in 
the  troubles  of  others,  but  because  it  is  an  inter- 
esting study  to  be  able  to  analyse  troubles  from 
which  we  ourselves  are  exempt." 

However  true  this  aphorism  may  still  be  in  this 
nineteenth  century,  we,  at  any  rate,  can  afford  to 

18 


be  a  little  more  charitable  than  L,ucretius,  and, 
although  an  office  doing  a  world-wide  business  may 
luckily  escape  when  a  fire  occurs  on  one  side  of 
the  globe,  the  principle  of  averages  is  sure  to  assert 
itself,  and  the  same  Company  will  doubtless  have 
its  aliquot  proportion  when  the  next  big  fire  occurs 
at  the  opposite  pole. 

Whilst  it  would  be  false  modesty  to  attempt  to 
conceal  from  ourselves  the  hope  of  each  one  of  us 
that  when  a  conflagration  occurs  one's  own  special 
Company  may  be  treated  tenderly,  we  must  not  forget 
that,  like  banks,  the  interests  of  our  great  Fire  Insur- 
ance Offices  are  really  bound  up  with  each  other  in- 
dissolubly,  and  that,  if  a  serious  disaster  hits  any 
one  of  us,  it  must  have  some  corresponding  effect  upon 
the  prestige  of  those  others  who  may  have  been 
more  fortunate. 

And,  so,  this  fiery  incident  in  I^ondon,  followed 
almost  immediately  by  a  similar  occurrence  at  the 
Antipodes,  seems  to  have  come  with  curious  oppor- 
tuneness, eloquently  illustrating  the  never-ending 
variety  of  our  daily  life,  which  every  hour  calls  for 
some  new  treatment — some  readjustment  of  our  men- 
tal compass,  requiring  us  to  be  always  on  the  alert, 

19 


prepared  to  trim  our  sails  or  to  alter  our  helm,  as  we 
can  never  forecast  from  what  new  quarter  the  wind 
may  blow. 

Conflagrations,  then,  are  blessings — often  disguised 
blessings — but  still  beneficent,  just  as  a  plague  or 
an  epidemic  to  a  L,ife  manager.  They  are  painful 
to  bear  at  the  time,  but  they  work  their  own  good. 
They  mostly  happen  in  districts  which  are  none  the  worse 
for  such  a  drastic  clearance.  Do  you  imagine  that 
if  the  Chicago  fire,  when  ^33,000,000  of  property 
was  swept  out  of  existence,  had  not  taken  place, 
Chicago  would  ever  have  become  the  great  city  it 
is  to-day?  It  might,  perhaps,  in  the  extent  of  its 
commerce  ;  but  it  is  more  than  likely  that  it  would 
have  been  cramped  and  fettered,  and  that  the  health 
and  comfort  of  its  vast  population  would  inevitably 
have  suffered  from  its  poorer  accommodation.  When- 
ever, then,  a  big  fire  occurs  we  naturally  look  for 
a  marked  improvement  in  the  character  of  the  rebuilt 
property,  conferring  aesthetic  and  practical  advantages 
on  the  community. 

But  conflagrations  have  another  use  for  us  :  they 
justify  to  the  public  our  raison  d'etre;  they  bring 
up  recruits,  just  as  that  historic  charge  at  the  Ridge 

20 


of  Dargai  has  created  a  new  eclat  and  enthusiasm 
for  your  famous  regiment  * '  The  Gordon  High- 
landers." Our  profits  are  maintained,  as  well  as 
leavened,  by  these  periodical  outbursts,  and  the 
public  have  ocular  demonstration  that  we  do  run 
these  heavy  risks,  and  that  we  are  therefore  not  un- 
reasonable in  asking  that,  for  our  risk,  we  should 
be  allowed  a  moderate  percentage  of  profit  for  our- 
selves. 

fire  Profits  The  principles  of  insurance  are  so  closely 
and  [liabilities,  allied  to  those  of  providential  organisations, 
that  it  would  not  be  judicious  for  us  to  hoodwink  our 
insured,  or  to  charge  them  rates  which  can  be 
proved  to  be  excessive.  It  is  proper  and  wise  for 
u?  always  to  exercise  a  ' '  sweet  reasonableness. ' '  If 
you  take  the  operations  of  all  the  British  Companies 
for  the  period  commencing  1881  to  date  (it  is  im- 
possible to  go  farther  back  if  the  figures  are  to  be 
in  any  way  complete),  you  will  find  that  the  net 
fire  premium  income  encashed  during  the  period  of  16 
years  has  been  ^244, 000,000.  This  indicates  the  mag- 
nitude of  our  business,  but  the  amount  must  be  dis- 
tributed amongst  nearly  60  Companies,  and,  when 
worked  out,  the  profit  to  them  on  this  immense 

21 


turnover,  with  all  its  risks,  and  with  a  continuously 
increasing  liability,  really  only  represents  the  modest 
ratio  of  something  less  than  6  per  cent.  And  yet 
this  is  the  heyday  of  our  cycle  of  prosperity,  after 
several  good  years  which  have  materially  assisted  the 
result,  but  which,  unfortunately,  are  not  likely  to 
be  continued  much  longer,  if  we  are  to  attach  im- 
portance to  the  regular  ebb  and  flow  which  seem  to 
be  invariably  confined  within  the  limits  of  each 
decade.  And,  for  this  profit,  we  are  not  only  working 
anxiously  and  watchfully,  day  by  day,  but  we  are 
all  the  time  running  untold  liabilities  in  every  quarter 
of  the  globe. 

In  1868,  when  the  duty  on  fire  business  in  this 
country  was  discontinued,  the  aggregate  sum  insured 
in  the  United  Kingdom  amounted  to  ^1,430,000,000; 
but  this  liability,  great  as  it  was,  has  since  expanded 
by  leaps  and  bounds.  I  have  made  a  little  calcu- 
lation which  leads  me  to  conclude  that,  at  the 
present  moment,  the  fifty-six  British  Companies  are 
running  the  risk  of  no  less  than  ^7,600,000,000,  that 
is  to  say  nearly  twelve  times  the  amount  of  the 
total  national  indebtedness  of  this  country.  Surely, 
then,  our  clients,  and  indeed  our  would-be  rivals, 

22 


whether  Governments  or  Municipalities,  must,  if  they 
are  thinking  men,  pause  before  deciding  that  the  in- 
surance business,  with  all  its  advantages  and  all  its 
hazards,  is  a  bonanza  and  a  monopoly.  We  must 
aim,  we  do  aim,  at  equity ;  and  if  this  principle  of 
fair  dealing  and  fair  treatment  to  every  honest  com- 
petitor and  to  every  class  and  trade  is  continued, 
we  need  have  no  fear  of  inroads  into  the  preserves 
which  we  have  cultivated  with  such  toil  and  care. 
We  do  not  decry  a  reasonable  amount  of  legitimate  com- 
petition ;  it  is  as  necessary  as  conflagrations.  It  pre- 
vents undue  profits,  it  proves  to  the  public  that  we 
are  not  members  of  a  gigantic  "trust."  When,  with 
us,  a  smaller  Company  is  swallowed  by  a  larger,  it 
is  not  with-  the  object  which  is  at  the  root  of  the 
operations  of  so  many  industrial  syndicates  and  com- 
binations, of  choking  off  a  vexatious  competitor  who 
is  keeping  down  rates,  but  because  the  absorber,  with 
its  greater  resources,  considers  the  business  is  worth 
more  to  it  than  is  its  market  value  as  a  separate 
concern. 

No ;  we  do  not  desire  excessive  profits.  We 
are  all  aware  it  is  a  law  of  economics  that  large 
profits  attract  capital,  intensify  competition,  reduce 

23 


rates,  and  so  rapidly  bring  about  the  dissipation  of 
all  profit,  and  end  in  a  state  of  things  much  worse 
than  would  have  been  the  case  if  only  the  business 
had  remained  quietly  and  moderately  prosperous. 

At  the  same  time  it  is  very  necessary  to  be 
Competition*  on  one's  guard  against  the  competition  of 
other  countries.  They  are  late  in  the  field,  and, 
therefore,  at  some  disadvantage,  but  they  come  well 
armed,  and  trained  by  the  practice  of  that  very 
habit  of  observation  which  is  so  essential  to  all  of 
us.  Here  in  this  kingdom  we  have  always  kept 
peculiarly  secure,  but  elsewhere  in  our  colonies  and 
in  the  wide  foreign  domain — only  limited  by  the  two 
Poles — to  which  every  Britisher  has  been  accustomed 
to  think  he  has  a  prescriptive  right,  we  have  now 
to  face  a  growing  aggression,  and  in  this  new  com- 
petition the  Germans  lead  the  van.  We  have  heard 
much  of  late  about  this  German  competition  in  our 
commercial  affairs,  and  it  has  been  a  surprise  to  me 
that  it  is  only  recently  our  authorities  and  our  press 
seem  to  have  wakened  up  to  the  fact  that  our 
business  in  many  directions  is  being  taken  from  us. 
Ten  years  ago,  in  South  America,  I  had  numerous 
illustrations  of  what  is  only  now  attracting  attention; 

24 


and  I  well  remember  being  told  that  the  Gauchos 
of  the  River  Plate  had  had  to  throw  over  the 
Englishman  for  the  supply  of  their  horse-shoe  nails, 
because,  forsooth,  he  insisted  upon  supplying  the 
pattern  made  in  Birmingham,  which  he  had  always 
been  accustomed  to  supply  to  others,  whereas  the 
Teuton  stepped  in  with  nails  * '  made  in  Germany ' ' 
of  the  shape  and  size  which  the  Gaucho  particularly 
desired.  This  is  the  German's  advantage — his  will- 
ingness to  adapt  himself  to  local  circumstances  and 
peculiarities,  however  preposterous  they  may  seem  in 
his  eyes — and  he  couples  therewith  an  incessant 
attention  to  the  most  elaborate  details  even  over  a 
small  transaction  which  an  Englishman  would  think 
was  not  worth  his  while.  Moreover,  a  German  is 
generally  a  better  linguist — I  will  not  say  a  better 
scholar,  but,  as  a  rule,  knowing  two  languages 
besides  his  own,  modern  languages  of  the  countries 
which  are  likely  to  be  most  useful  to  him.  The 
German  is,  above  everything,  a  utilitarian.  I 
believe  that  in  many  schools  in  Germany,  whilst 
the  dead  languages  are  not  ignored,  they  are  re- 
stricted to  a  course  of  thirty  days,  at  the  end  of 
which  period  L,atin  and  Greek  are  not  only  dead 

25 


but  buried,  and  all  the  energies  of  the  student  are 
devoted  to  those  European  languages,  English  being, 
of  course,  one  of  them,  which  will  help  him  most. 
Now  this  does  not  exactly  make  for  culture,  but  it 
is  practical ;  and,  after  all,  it  is  a  poor  consolation 
to  a  clever  scholar — and  there  are  many  such — to 
know  that  he  has  passed  through  the  University, 
and  can  recite  in  the  vernacular  many  a  classical 
ode,  if  he  is  not  earning  as  much  as  will  keep 
body  and  soul  together.  Classical  culture  is  an 
enviable  acquisition,  but,  like  an  old  master  stored 
away  in  a  garret,  it  is  of  questionable  value  unless 
it  is  allied  to  position  and  means.  Forewarned,  then, 
is  forearmed,  and  it  is  clearly  wise  that  we  should 
be  on  our  guard  against  the  aggressions  of  our 
Continental  rivals,  especially  in  our  colonies  and  de- 
pendencies. 

Suppose   we    now    turn    to    another    phase    of 
moral  fiazard.  ,  , 

our  entertaining  business — the  study  of  human 

character,  with  its  foibles  and  its  idiosyncracies.  Is 
it  not  fascinating  to  dive  into  the  depths  of  a  man's 
mind,  to  find  out  what  he  is  really  aiming  at? 
How  often  -has  the  faculty  to  be  exercised  in  assess- 
ing the  value  of  a  client?  And  it  is  quite  as  import - 

26 


ant    when  placing  his  name  on    the    books    as    it    is 
when  his  loss  comes  to  be   adjusted. 

How  curious  and  almost  unfathomable  are  the 
laws  governing  this  question  of  moral  hazard  !  We 
all  know — it  is  one  of  the  first  principles  we  learned — 
that  it  never  pays  to  accept  a  doubtful  client,  and  that 
a  fine  physical  risk  is  worth  nothing,  and  less  than 
nothing,  to  an  underwriter,  if  its  owner  has  a  shady 
reputation.  If  a  Company  could  be  sure  of  keeping 
its  books  quite  clear  from  this  taint  of  moral  hazard, 
it  could  count,  at  a  modest  computation,  upon  a 
profit  of  25  per  cent,  beyond  the  average.  Hence, 
we  must  discriminate  with  much  nicety.  The  client's 
nationality  will  tell  us  something,  and  so  will  his 
business  and  his  antecedents.  But  we  must  be  careful 
in  our  criticisms  and  be  prepared  to  form  our  judg- 
ments, especially  in  our  foreign  underwriting,  without 
being  influenced  by  stereotyped  prejudices.  Take, 
for  example,  the  Turk.  I  know  the  name  is  not  . 
savoury,  especially  of  late,  but  it  would  not  be  right 
to  ignore  the  fact  that  a  well-brought-up  Turk — a 
conscientious  Mahommedan — is  often  quite  as  good 
as  many  a  Christian,  and  that  the  stigma  which 
rightly  attaches  to  his  unfortunate  country  is  largely 

27 


due  to  the  mass  of  heterogeneous  nationalities  from 
every  country  in  Europe  which  have  made  Constan- 
tinople their  home — scores  of  adventurers,  without 
religion  or  principle,  who  have  certainly  left  their 
own  country  for  their  country's  good,  and  who  have 
had  a  material  hand  in  blackening  the  name  of  a 
beautiful  city  and  a  resourceful  country.  It  is  these 
peripatetic  individuals  who  require  to  be  watched, 
and  I  do  not  care  what  the  country  is,  but  I  would 
give  the  preference  to  him  who  has  grown  up 
amongst  his  surroundings,  and  has  learnt  to  have 
some  real  patriotism,  as  against  the  man  who  has 
no  stake  or  interest  in  his  adopted  country  beyond 
what  he  can  make  out  of  it. 

I  have,  indeed,  always  entertained  an  affectionate 
\  /  regard  for  the  Mahommedan  ever  since  I  visited  his 
headquarters  at  Constantinople,  and  this  notwith- 
standing the  fact  that  at  that  time  Insurance  business 
was  victimised  by  a  gang  of  depredators,  who  had  the 
audacity  to  ply  their  nefarious  business  of  fire-raising 
and  blackmail  in  spite  of  such  meagre  precautions 
as  the  authorities  took  to  thwart  them.  Only  a 
week  before  my  visit  the  chief  clerk  of  one  of  the 
offices,  who  had  courageously  declined  to  pay  the 

28 


face  value  of  a  policy  because  lie  knew  that  the 
property  had  been  set  on  fire  by  this  very  gang, 
had  been  battered  senseless ;  and  for  me  it  was  a 
novelty,  although  scarcely  exhilarating,  to  find  that 
every  insurance  agent  was  in  terror  of  assault,  and 
not  only  carried  about  a  loaded  revolver,  but  in 
some  cases  had  a  bodyguard  as  well.  But  these 
blackmailers  were  but  the  refuse,  the  scum,  the 
mixture  of  Maltese,  Neapolitan,  and  what  not,  which 
helps  to  eke  out  the  seething  mass  of  humanity  in 
the  purlieus  of  Galata  and  Stamboul,  and  it  would 
be  a  cruel  injustice  to  imagine  that  these  are  fair 
specimens  of  the  real  Turk — the  Mahommedan  who 
loves  his  Koran  with  all  its  admirable  precepts,  and, 
what  is  more,  follows  them.  Granted  that  he  is  a 
fanatic,  that  his  religion  carries  him  away,  that  he 
may  in  his  enthusiasm  turn  bitter  and  dangerous ; 
but  let  us  not  charge  him  with  dishonesty  or  decep- 
tion until  we  prove  him  guilty. 

Another  reminiscence  from  the  still  further  East : 
When  I  first  set  foot  in  India  I  was  placed  in 
charge  of  one,  Sheikh  Mahboob.  He  was  called  my 
servant,  or  ' (  boy ' ' — but  he  was  really  much  more 
than  that ;  he  was  my  lifeguard,  my  treasurer,  the 

29 


keeper  of  my  keys  and  of  all  my  worldly  goods  ;  and 
at  night,  after  hovering  round  in  the  dim  light  of 
my  room  and  tucking  in  the  folds  of  my  mosquito 
net,  he  would  lie  down  at  the  door  like  a  faithful 
watch-dog,  and  woe  betide  the  intruder  who  attempted 
to  cross  the  threshold.  Whilst  he  accompanied  me 
in  my  travels  I  seized  occasional  opportunities  to 
probe  into  his  thoughts  and  the  composition  of  his 
mind ;  I  learned  to  admire  his  simple  faith,  his 
affection  for  his  family,  his  freedom  from  vice  ;  and 
when  I  parted  from  that  solemn,  turbaned  ascetic  on 
the  steamer  at  Bombay,  I  could  not  but  contrast 
his  guilelessness  with  the  characteristics  of  some 
others  who  had  also  come  down  to  the  wharf  to 
bid  me  adieu.  You  have  all  heard  of  the  ''wily 
Hindoo,"  and,  perhaps,  of  the  Bombay  broker.  If 
so,  you  are  already  aware  that  it  would  take  more 
than  a  month,  and  more  than  a  year  to  fathom  the 
ingenious  intricacies  of  his  mind.  You  must  test 
his  statements,  check  his  assurances,  and  generally 
disbelieve  three-quarters  of  what  he  tells  you ;  and, 
whilst  he  is  perfectly  aware  of  the  halo  of  doubt 
which  thus  surrounds  him,  he  will  always  come  up 
smiling  with  the  smug  conviction  that  he  has  made 

30 


himself  part  and  parcel  of  the  business  and  cannot 
be  ousted.  And  so,  when  I  was  escorted  on  board 
by  two  or  three  of  these  gentlemen,  and  when  they 
calmly,  to  the  amazement  of  the  other  passengers, 
crowned  me  with  garlands  of  flowers,  with  a  pungent 
aroma,  something  stronger  than  that  of  our  tube- 
rose, I  gave  them,  as  in  duty  bound,  my  courteous 
acknowledgments,  although  I  could  not  but  suspect 
that  there  was  a  deep  and  interested  motive  lying 
away  at  the  bottom  of  these  pointed  attentions. 

In  fact,  the  child  of  nature — the  Indian,  for 
example,  who  has  never  had  the  opportunity  or  the 
necessity  to  practise  his  mind  in  the  ingenious  arts 
of  our  active,  self-interested  business  life — starts  from 
a  better  standpoint  on  this  question  of  moral  hazard 
than  the  man  whose  commercial  money-making  in- 
stincts are  dominant. 

I  remember  being  puzzled,  when  in  Peru  and 
Chili,  as  to  why  the  Peruvian — I  mean  the  real 
born-and-bred  Peruvian — was  more  trustworthy  than  the 
Chilian,  as  exemplified  by  the  comparatively  greater 
number  of  suspicious  fires  in  the  latter' s  country.  My 
study  resulted  in  the  conclusion  that,  nearer  the  equator, 
a  man  is  not  so  active  nor  so  grasping  as  he  is  in 


a  more  temperate  latitude,  and,  further,  that  the 
greater  infusion  of  foreign  blood  and  foreign  methods 
into  Chili  had  had  a  deteriorating  effect  on  the  busi- 
ness morals. 

Ji  £o$$  Settlement    ^e  mention  of   Peru   calls   to   mind    an    in- 
itl  PCfU«  cident   which   made   a    draft    upon    not    only 

my  store  of  philosophy  but  such  knowledge  of 
human  nature  as  I  then  possessed.  To  ease  the 
tedium  of  waiting  for  a  man  I  was  bound  to  meet, 
I  seized  the  opportunity  of  ascending  the  marvellous 
Oroya  railroad,  supposed  to  be  the  most  interesting 
railway,  although  but  80  miles  long,  in  the  world. 
It  was  then,  and  perhaps  is  still,  but  an  incomplete 
piece  of  wonderful  engineering,  as  it  only  ran  up  as 
far  as  the  topmost  mountain  passes,  and  had  not 
been  carried  down  on  the  other  side  into  the 
' '  promised  land ' '  of  Bolivia.  The  trip  had  its 
perils,  but  also  its  rewards.  Not  content  with 
reaching  the  highest  station  (some  13,000  feet  above 
the  level  of  the  sea),  we  climbed  up  on  mule-back 
past  the  final  tunnel  at  an  altitude  of  16,000  feet, 
and  up  into  the  regions  of  perpetual  snow,  untouched 
by  the  fierce  rays  of  a  tropical  sun.  The  descent 
was  the  most  fascinating  experience  I  have  ever 

32 


enjoyed.  Seated  on  a  hand-brake — an  open  car, 
little  more  than  a  plank  resting  on  four  wheels — 
with  a  pilot  whose  grip  on  the  brake  was  the  only 
safeguard  between  us  and  eternity,  down  we  came 
in  advance  of  the  train,  ready  to  clear  away  any 
obstacle  on  the  line  ;  down  from  the  frosty,  biting  atmos- 
phere, hemmed  in  by  precipices  2,000  and  3,000  feet 
high,  through  interminable  tunnels  black  as  pitch ; 
down  past  hovels  which  went  by  the  name  of  stations; 
down  into  warmer  air,  where  we  threw  off  our  rugs 
and  overcoats ;  down  through  vineyards,  and  orchards 
of  granadillas,  alligator-pears,  and  tropical  fruit 
galore ;  down  into  the  town  of  I,ima,  our  journey's 
end.  All  this  was  but  an  interlude ;  then  came 
the  anti-climax.  Hardly  had  I  set  foot  on  terra 
firma  than  I  was  greeted  with  the  news — the  news 
which  many  a  luckless  branch  manager  just  returning 
from  a  holiday  has  so  often  experienced — that  a  fire 
had  occurred,  and  one  of  our  risks  burnt  out.  It 
was  only  a  private  house,  but  it  was  a  large  one, 
and  unfortunately  the  owner  had  developed  a  mania 
for  curios.  Now,  there  are  various  degrees  of  trouble- 
some loss  settlements.  A  draper's  shop  which  has 
been  run  without  books  is  tiresome ;  a  pawnbroker's 

33 


equally  difficult ;  a  curiosity  shop  still  more  indefinite; 
but  a  private  collection  of  expensive  curios,  without 
the  semblance  of  an  inventory,  is  a  Chinese  puzzle. 
The  debris  in  this  case  was  almost  non-existent ;  and 
I  found  it  more  profitable  to  investigate  the  man 
himself  and  his  physiognomy.  I  concluded  he  was 
comparatively  honest,  and  that  in  recovering  the  face 
value  of  his  policy  he  did  not  make  a  large  profit. 
One  item,  however,  was  too  serious  to  pass  without 
an  argument.  It  was  a  four-post  bedstead,  which 
the  owner,  with  Peruvian  vehemence,  claimed  was 
not  only  Elizabethan,  but  had  actually  been  slept  in 
by  Queen  Elizabeth  herself.  It  struck  me  then,  and 
often  since,  that  that  illustrious  sovereign  must  have 
been  extraordinarily  peripatetic  to  have  reposed  in  so 
many  beds ;  and  I  can  only  conclude  that  her  Majesty 
has  been  much  maligned  by  curio-mongers,  or  that 
there  is  some  magic  about  her  bedsteads,  which  seem 
to  grow  in  number  year  by  year — upon,  I  suppose, 
the  same  principle  as  the  increase  in  the  number  of 
pensioners  of  the  civil  war  in  the  United  States. 
the  €ffCCt$  There  is  another  aspect  of  this  deeply  inter- 
Of  CfadC  upon  esting  subject  which  is  often  ignored.  It 
moral  Ijazard  does  not  always  f0uow  that  trade  being  bad 

34 


is  the  reason  for  losses.  On  the  contrary,  a  marine 
underwriter  will  tell  you  that  he  rather  likes  shipping 
to  be  bad,  because  then  a  captain  is  hyper-cautious, 
knowing  that  if  he  loses  his  ship  he  will  not  be 
likely  to  get  another.  The  wonder,  indeed,  is  that, 
as  the  shipping  industry  seems  to  be  in  a  chronically 
suffering  condition,  the  marine  companies  do  not 
make  regular  handsome  profits.  But,  in  our  own 
fire  business,  the  reason  for  the  moral  hazard  or  the 
contrary  often  lies  a  long  way  from  the  surface. 
Why,  for  instance,  did  we  all  suffer  so  smartly  in 
America  five  years  ago,  after  the  passing  of  the 
high  Tariff  Bill?  Not  because  trade  was  bad,  but 
because  immense  stocks  of  goods  were  hurried  into 
the  country  to  escape  the  duties,  and  the  American 
puplic  were  for  a  time  loth  to  take  them  at  the 
higher  figures  which,  because  of  the  new  duties,  the 
retailers  demanded.  It  is  generally  when  stocks  are 
low,  and  when  shopkeepers  are  steering  their  course 
with  shortened  canvas  under  stress  of  bad  weather, 
that  the  Insurance  Company  seems  to  enjoy  the 
greatest  immunity  from  loss.  It  is  indeed  often  very 
difficult  to  gauge  the  real  operating  causes  for  a  run 
of  unusual  prosperity  or  of  depression  in  our  business, 

35 


but  we  may  feel  certain  that  these  variations  are 
mostly  due  to  the  ingenious  working  of  the  wonder- 
ful human  brain,  and  that,  if  the  fault  does  not  lie 
with  the  insured  himself,  he  is  probably  the  victim 
of  circumstances,  through  the  disaffection  of  em- 
ployees, and  the  net  result  to  the  Company  is  just 
the  same. 

You  have  already  had  set  up  before  you  the 
lofty  ideal,  the  code  of  ethics,  which  should  govern 
one's  daily  business  life.  It  is  an  admirable  doctrine, 
and  it  would  not  only  be  beneficent,  but  beneficial 
to  all  of  us,  if  we  could  but  infuse  a  little  more 
of  it  into  the  mass  of  insurers  whose  business  we 
have  to  deal  with.  Some  years  ago  we  had  a  very 
interesting  case  of  uncertain  liability  discussed  at  our 
Liverpool  Assizes.  The  policy,  a  floating  one,  had 
been  effected  whilst  the  fire  was  burning,  and  it  was 
difficult  to  determine  whether  the  insured  and  the 
Company,  by  its  representative,  were  both  aware  of 
the  fire,  or,  if  they  were,  whether  the  risk,  eventually 
destroyed,  was  likely  to  be  involved.  After  consider- 
able evidence,  the  judge,  probably  in  a  quandary, 
gave  vent  to  the  sapient  and  time-worn  remark  that 
"Honesty  is  the  best  policy";  to  which  the  counsel 

36 


promptly  responded,  ''No,  my  lord,  if  you'll  pardon 
me,  in  this  case  honesty  would  have  been  no  policy." 
Ji  tribute  to  ^e  fi^h  of  humour  is  indeed  entitled  to  a 
Rumour.  prominent  place  in  our  day's  work.  It  is 
healthy  and  vitalising.  It  gives  a  fillip  to  many 
an  abstruse  calculation  and  many  a  dry  problem. 
Eliminate  it,  and  you  put  out  a  twinkling  light 
which  often  lends  the  one  bright  element  in  what 
would  otherwise  be  a  burdensome  task.  To  quote 
again  from  the  sage  of  Kcclefechan  :  '  *  Humour  has 
justly  been  regarded  as  the  finest  perfection  of  poetic 
genius.  He  who  wants  it,  be  his  other  gifts  what 
they  may,  has  only  half  a  mind ;  an  eye  for  what 
is  above  him,  not  for  what  is  about  him  or  below 
him." 

How  many  phases  of  our  business  may  be  / 
brightened  by  allowing  ourselves  to  see  the  humour 
so  often  bubbling  up.  Take,  for  example,  the  average 
clause — a  heavy,  difficult,  unending  puzzle,  affording 
scope  for  unlimited  argument  and  difference  of  opin- 
ion. It  has  already  been  dissected  before  your  eyes, 
by  the  practised  hand  of  a  distinguished  vivisector. 
You  have  had  its  vagaries  shown  up  in  public,  its 
incongruities  analysed,  its  wording  pulverised ;  and, 

37 


by  a  wealth  of  pungent  illustration,  you  must  have 
arrived  at  the  conclusion  that  language  was  given 
us  to  conceal  our  thoughts,  or  rather  our  inten- 
tions, and  that  it  is  quite  possible  to  have  a  range 
which  is  not  a  range,  a  floater  which  is  a  specific, 
and,  in  short,  half-a-dozen  lines  which  may  mean 
two  or  more  things,  diametrically  opposed,  at  one 
and  the  same  time.  And  thus  we  try  to  correct 
an  anomaly,  and  to  plan  some  verbiage  which  will 
be  proof  against  all  future  assault  and  dispute.  But 
is  this  fair?  Why  should  we  at  one  fell  blow  deprive 
our  descendants  of  the  one  evergreen  puzzle  which 
has  afforded  us  and  past  generations  so  much  enjoy- 
ment and  mental  gymnastics?  Why  should  we 
attempt  to  make  the  functions  of  the  future  arbi- 
trator a  sinecure,  and  settle  in  advance  the  many 
interesting  problems  which  come  up,  like  conflagra- 
tions, with  periodic  frequency — problems  which  are 
ever  fresh,  and  which,  when  we  are  not  otherwise 
too  engrossed,  serve  to  sharpen  our  wits  and  thinking 
powers  ?  No  ;  the  insurance  business  would  be  stale  and 
flat  if  this  phase  of  it  were  to  be  removed  from  the 
range  of  argument  and  discussion.  I^et  us,  there- 
fore, cling  to  the  phrasing  of  our  dear  old  average 

38 


clauses.  Formerly  we  used  to  have  three,  now  we 
have  only  two,  in  many  places  we  are  cut  down  to 
a  poor  little  one ;  but  do  not,  for  the  sake  of  our 
successors,  let  us  elucidate  every  syllable  in  this  one  or 
two,  so  that  no  difference  of  opinion  will  ever  again 
arise. 

Then  we  have  the  causes  of  our  fires,  always 
an  interesting  and  a  valuable  study — a  study  which 
pays ;  for,  if  we  can  ascertain  with  accuracy  the 
cause  of  a  fire,  we  add  to  our  experience,  and  we 
have  a  clue  as  to  how  to  act  with  other  risks  of 
the  same  character.  And,  amongst  these  causes, 
which  are  generally  so  stereotyped  and  so  natural 
that  we  are  apt  to  take  them  all  as  a  matter  of 
course,  are .  we  not  often  interested  and  amused  by 
some  extraordinary  claim  or  some  far-fetched  origin? 
The  insured,  for  instance,  who  puts  his  lighted  cigar 
on  his  billiard  cloth  and  claims  for  a  new  table,  or 
who  permits  his  chimney  to  catch  fire  and  claims 
that  his  pictures  have  been  ruined  by  the  ejected 
soot  and  smoke,  or  the  many  curious  pranks  of 
spontaneous  combustion — how  the  sun,  focussing 
through  a  bull's-eye  pane  of  glass,  always  seems  to 
find  out  the  spot  where  the  greasy  rags  have  been 

39 


left  lying.  One  most  peculiar  claim  I  well  recollect, 
where  a  man  had  burnt  himself  and  his  clothing  by 
a  too  hot  mustard  poultice,  and  whilst  he  could  not 
recover  for  the  damage  to  himself  under  his  fire 
policy,  he  did  recover  for  the  injury  to  his  clothing, 
contending  that,  as  he  was  not  a  hay-stack,  he  had 
a  valid  claim  for  damage  occasioned  by  the  natural 
heating. 

You  have  all  read  from  time  to  time  about  the 
peculiarities  of  the  Chinaman,  which  are  well  worthy 
of  study,  as  it  takes  a  long  time  before  one  can 
thoroughly  understand  him.  I  remember  an  instance 
where  a  Chinese  shopkeeper  set  fire  to  his  place  in 
the  course  of  a  search  which  he  was  making  for  some  of 
his  goods,  he  having,  forsooth,  in  order  to  light  his 
way,  fastened  his  candle  in  the  socket  of  his  curled- 
up  pig- tail.  I  also  vividly  recall  the  indignation 
which  I  happened  to  excite  because,  when  going 
through  a  risk  in  a  Chinese  quarter,  I  had  come 
across  a  number  of  little  lighted  lamps  and  sticks 
heaped  together  on  the  floor,  which  I  had  asked  to 
be  removed,  but  it  transpired  that  they  were  a  set 
of  Chinaman's  gods  and  illuminations,  with  the  usual 
joss-sticks  accompanying ;  and  the  fortunate  interven- 

40 


tion  of  a  friend  was  necessary  to  pacify  the  shop- 
keeper for  the  indignity  which  I  had  unwittingly 
been  guilty  of. 

There  is  indeed  grim  humour  in  the 'customs  of 
many  foreign  countries.  One  wonders  how  arson  is 
possible  in  Chili,  and  in  Greece,  seeing  that  in  those 
countries,  when  a  fire  takes  place,  the  tenant  of  the 
building  is  walked  off  to  gaol,  to  escape  from  which 
he  must  first  prove  his  innocence.  But,  then,  it  is 
not  often  that  he  is  detained  for  long,  as  we  all  know 
the  elasticity  of  foreign  courts  of  justice,  and  the  many 
opportunities  for  purchasing  a  favourable  judgment. 

In  Peru,  each  nationality,  Peruvian,  English, 
German,  French  and  Italian,  has  its  volunteer  fire 
brigade,  and, I  have  seen  three  or  four  of  them  tear- 
ing down  to  a  fire,  and  then  having  a  tussle  for 
twenty  minutes  or  so  for  first  possession  of  a  hydrant, 
by  which  time  the  mud  roof  has  fallen  in.  One 
might  even  come  nearer  home  to  recall  an  incident 
where  the  same  kind  of  rivalry  occurred  not  fifty 
miles  from  Glasgow,  to  the  cost  of  the  offices  inter- 
ested. 

And  so  we  could,  with  a  little  more  thought,  and 
a  little  more  time,  recall  many  instances  of  curious 


customs  and  regulations  abroad  which  are  frequently 
preposterous  and  incongruous,  and  yet  afford  a  spice 
to  the  routine  of  our  daily  work,  lightening  its  tedium 
and  relaxing  its  severity. 

tftt  Scientific  ^ut  *k*s  ^umorous  phase  must  not  be  allowed 
Accessories  of  an  to  detract  from  the  seriousness  with  which 
Underwriter.  many  subjects  require  to  be  grappled.  I 
have  already  alluded  to  the  desirable  scientific  ac- 
cessories of  an  aspiring  underwriter.  Shorthand 
should  always,  in  my  estimation,  occupy  a  prominent 
place.  True,  it  does  not  open  the  door  to  a  knowledge 
of  a  country  or  a  literature.  It  is,  as  L,ord  Her- 
schell  says,  but  "a  means  to  an  end,"  but,  as  a 
means,  it  is  an  invaluable  stepping-stone  to  many 
an  ambitious  junior  who  would  not  otherwise  so 
readily  attract  the  notice  of  his  superior  officer. 

A  modern  language  is,  again,  an  acquisition — 
better  one  language  thoroughly  than  two  indifferently — 
also,  a  knowledge  of  chemistry,  and  of  electricity, 
inestimable  to  the  surveyor  if  he  has  sufficient  time 
and  sufficient  opportunity  to  make  practical  applica- 
tion of  his  knowledge,  so  as  to  qualify  himself  as 
a  real  expert.  For,  in  this  study  of  electricity, 
there  is  little  doubt  that  a  superficial  or  only  theo- 

42 


retical  knowledge  may  be  dangerous,  and  lead  to 
embarrassing  pitfalls.  Electricity,  that  vital,  mys- 
terious power,  pregnant  with  possibilities,  has  during 
the  last  ten  years  revolutionised  many  sections  of 
our  business,  and  has  introduced  a  new  factor  which 
must  not  be  disregarded.  There  is  strong  ground 
for  the  belief  entertained  by  some  of  our  thoughtful 
underwriters  that  in  America,  at  any  rate,  electric 
lighting  was  accountable  to  a  large  extent  for  the 
heavy  incidence  of  our  loss  ratios  from  1891  to  1893. 
Any  radical  change,  however  beneficial  it  may  be 
in  the  long  run,  is  unsettling,  and  may  be  harmful 
whilst  it  is  in  process  of  adoption.  Undoubtedly, 
when  properly  installed,  lighting  by  electricity  is 
safer  from  a  fire  hazard  point  of  view  than  gas  and 
other  antiquated  methods,  but  it  is  equally  certain 
that,  when  electric  lighting  began  to  be  freely  intro- 
duced into  manufacturing  risks  and  business  premises, 
there  must  have  been  hundreds  of  dangerous  instal- 
lations, with  wires  imperfectly  insulated,  exposed,  in 
contact  with  wood- work,  or  with  a  careless  absence 
of  cut-outs,  and  the  inevitable  result  would  be  a 
short  circuit,  and  disaster.  It  would,  indeed,  be 
exceedingly  interesting  if  we  could,  by  some  magic 

43 


process,  pick  out  from  the  host  of  ''unknown  causes" 
the  many  instances  which  must  have  happened  where 
some  little  defect  in  the  electric  installation — due  to 
carelessness,  or,  perhaps,  in  the  earlier  stages,  to 
ignorance — has  involved  the  destruction  of  a  fine 
risk. 

Photography  is  also  a  modern  acquisition  which 
the  surveyor  can  often  turn  to  good  advantage ;  but  this, 
again,  must  not  be  allowed  to  mislead  or  to  act  as 
a  substitute  for  the  more  detail  work  and  data 
necessary  to  the  true  understanding  of  a  risk.  It  is 
far  more  important  for  the  surveyor  to  give  an 
accurate  description  of  the  dangerous  points  of  a  risk — 
the  location  of  the  boiler-house,  the  openings  through 
the  walls  and  through  the  floors,  the  opposing  win- 
dows, etc.,  etc. — than  to  please  the  eye  of  his  chief 
by  two  or  three  artistic  photographs  of  the  exterior, 
which  show  off  the  building  to  advantage,  but  do 
not  reveal  its  defects. 

Day  by  day  the  surveyor  must  watch  and  study 
every  new  process  that  is  announced.  The  change 
from  stones  to  rollers  in  our  corn  mills,  from  mule 
to  throstle  spinning  in  our  cotton  mills,  the  intro- 
duction of  electricity  into  many  processes  at  our 

44 


chemical  works,  the  imminent  adoption  of  acetylene 
gas  with  its  attendant  dangers,  and  many  other  new 
features  coming  under  our  notice  every  day,  all 
have  a  bearing  upon  our  business  and  its  results. 

Again,  a  knowledge  of  values  is  as  essential  to 
an  insurance  surveyor  as  is  the  faculty  of  taking 
out  quantities  with  accuracy  to  an  architect.  Before 
a  fire,  it  is  not  very  material  to  ascertain  the  worth 
of  a  building,  because  the  owner  of  a  building 
rarely  insures  his  property  from  malice  aforethought. 
But  much  depends  upon  the  value  of  the  stock, 
and  many  a  fire  has  been  escaped  by  a  smart 
inspector  detecting  that  the  goods  could  not  reason- 
ably be  worth  the  sum  set  upon  them,  which  is 
tantamount  to  the  conclusion  that  the  proposer  must 
have  had  a  sinister  motive  in  view.  The  honest 
man  never  attempts  to  insure  his  property  for  more 
than  it  is  worth ;  but  he  is  none  the  less  calcu- 
lating, and  frequently  does  the  opposite,  electing  to 
take  some  of  the  risk  on  his  own  shoulders,  not 
from  any  philanthropic  motive,  but  in  order  to  save 
premium.  He  does  so  with  a  light  heart,  knowing 
that  the  Company  must  bear  the  full  brunt  of  any 
loss  that  may  occur  up  to  the  face  value  of  his 

45 


policy,  and  that  his  share  of  the  insurance  can  only 
be  called  upon  in  the  event  of  the  loss  being  greater 
than  the  amount  for  which  his  policy  has  been  taken 
out.  Seeing  that  our  rates  are  intended  to  be  based 
upon  the  approximate  hazard  of  each  class  of  risk, 
assuming  a  full  insurance,  it  is  remarkable  that  in 
this  country  we  have  gone  on  so  long  without 
applying  the  average — or  co-insurance,  which  is  a 
more  self-explanatory  word — to  specific  policies  as 
well  as  to  floaters.  How  rare  are  the  instances  in 
our  tariffs  where  this  principle  has  been  given  effect 
to — and  yet  it  is  not  for  want  of  precedent,  as  the 
Continent,  although  maintaining  a  lower  average  of 
rates,  has  always  recognised  the  perfect  equity  of  a 
compulsory  full  insurance,  or,  in  default,  that  the 
insured  should  bear  his  share  of  any  loss,  however 
small,  pari  passu  with  the  Company.  It  is,  however, 
a  satisfaction  to  think  that  this  principle,  the  cor- 
rectness of  which  must  appeal  to  every  reasonable 
man,  is  becoming  better  appreciated  and  understood, 
and  that  its  application  is  extending.  In  America 
it  is  now  more  customary  than  it  was  ten  years 
ago,  and,  if  the  full  co-insurance  is  not  possible, 
the  80  per  cent,  clause  constitutes  a  very  useful 


substitue  as  preventing  the  leakage  of   premiums   on 
desirable  classes  of  risks. 

To  the  assessor,  the  ability  to  measure  up  the 
value  of  a  risk  is  a  prime  necessity,  A  trained 
adjuster  having  his  mind  stocked  with  a  variety  of 
previous  incidents  enters  upon  each  fresh  case  with 
zest  and  enjoyment,  knowing  that  it  is  almost  certain 
to  add  some  new  point  to  his  experiences.  He  must 
be  a  true  judge  of  character,  and  the  first  few 
minutes  of  his  initial  interview  will  decide  him  as 
to  whether  he  may  enter  upon  the  adjustment  with 
confidence  and  security,  or  whether  it  is  a  case 
which  is  likely  to  involve  many  days  and  weeks  of 
laborious  checking  and  discussion.  In  any  case,  some 
expert  must  determine  with  care  and  minuteness 
what  is  the  value  of  every  lot  of  goods  in  the 
building,  whether  it  be  a  wholesale  warehouse  or  a 
little  shop,  and  the  insurance  surveyor  should,  him- 
self, qualify  to  be  that  expert. 

f  rei     Gxcbana*     ^he  cluestion  of  Exchange  is  one  of  material 

interest,  and   even  fascination,  in  our  foreign 

operations.       Its    vagaries    are    at    times   bewildering. 

Of  course,  it  is    largely    affected    by    the    fluctuating 

relation  to  each  other  of  gold  and  silver ;    and  it  is 

47 


an  obvious  truism  that  if  the  production  of  either 
of  these  metals  goes  on  increasing  in  undue  propor- 
tion, the  other  must  appreciate  in  its  relative  value. 
This  consideration  does  not  affect  us  at  home,  because 
we  have  the  gold  standard  and  have  elected  to  regard 
the  shilling-piece  as  equivalent  to  one-twentieth  of  a 
sovereign,  although  the  intrinsic  value  of  its  silver, 
if  thrown  into  the  melting-pot,  is  less  than  sixpence. 
But  it  does  seriously  affect  the  commercial  operations 
of  many  foreign  countries  where  silver  is  the  standard, 
including  our  own  dependency  of  India.  There  they 
have  stemmed  the  flowing  tide  of  silver  by  closing 
the  mints,  and  so  maintained  the  marketable  value 
of  their  rupee,  not  at  the  2s.  which  it  used  to  be 
(although  it  contains  at  least  as  much  silver  as  our 
own  florin),  but  at  two- thirds  of  that  par  value, 
which  is,  at  any  rate,  better  than  the  is.  which 
would  have  been  the  inevitable  rate  if  no  such  check 
had  been  created.  Again,  in  Chili  they  have  adopted 
a  standard  sterling  value  for  their  dollar  which, 
whatever  effect  it  has  had  upon  the  commercial 
ramifications  of  that  country,  has  certainly  enabled 
us  to  keep  our  Chilian  accounts  upon  a  level  basis, 
instead  of  their  being  subject  to  constant  fluctuations. 


Although  perhaps  not  absolutely  essential,  it  is  always 
an  advantage  to  a  foreign  department  official  to 
understand  the  why  and  the  wherefore  of  these 
curious  fluctuations  in  foreign  exchanges.  Why 
should  the  Brazilian  milreis  have  fallen  from  2s.  to 
yd.  unless  it  is  that  a  republic,  in  lieu  of  an  empire, 
portends  unsettlement  and  insecurity?  It  may  mean 
an  abnormal  issue  of  paper  money,  which  must,  of 
course,  bring  its  own  Nemesis.  I  well  remember 
when  I  was  in  Peru  that  there  were  two  kinds  of 
currency,  the  one  "  soles  [or  dollars]  bilhettes,"  which 
were  the  old  paper  dollars  issued  before  their  war 
with  Chili,  but  which  had  fallen  until  they  had  then 
reached  the  sterling  value  of  a  penny-half-penny — 
surely  a  record  value  of  any  dollar  still  in  currency. 
The  Peruvians  had,  however,  shortly  before,  pulled 
themselves  together  with  a  wrench,  and  had  issued 
a  new  currency  of  handsome  silver  dollars,  each 
containing  its  full  value  of  bullion ;  and,  although 
they  passed  as  dollars,  and  as  such  worth  only 
33.,  they  were  quite  as  large  and  weighty  as 
our  55. -pieces.  This  was  going  to  the  opposite 
extreme :  a  drastic  and  weighty  remedy,  as  you 
would  realise  if  you  had  been  compelled  to  carry 

49 


away  seventy  of  them  in  exchange  for  a  ^10  note. 
But  perhaps  the  most  curious  exchange  incident 
which  I  recall,  was  in  Uruguay.  There,  with  all  their 
revolutions  and  their  peculating  Presidents,  they  have 
a  gold  standard ;  and  it  felt  like  home  to  hear  that, 
whilst  their  gold  dollar  was  the  standard  coin,  the 
English  sovereign  was  accepted  as  equally  standard. 
My  patriotism,  of  course,  decided  me  to  have  so  many 
sovereigns,  according  to  the  rate  of  exchange  then 
ruling,  in  lieu  of  a  debit  of  ^10  on  my  letter  of 
credit.  You  may  imagine  my  astonishment  at  receiv- 
ing not  only  the  ten  sovereigns,  full  par  value,  but 
nearly  a  dollar  in  silver  coins  as  well.  At  first  I 
assumed  there  was  a  mistake,  but  the  cashier  ex- 
plained to  my  satisfaction  that  at  that  moment 
English  sovereigns  wrere  at  a  discount,  that  they 
consequently  wished  to  get  rid  of  them,  and  that, 
after  charging  for  the  bank's  own  commission,  the 
surplus  silver  was  really  so  much  compensation  to 
me  for  taking  them  off  their  hands  to  off-set  the 
freight  which  they  would  otherwise  have  had  to  pay 
for  their  voyage  home.  This  reflection  upon  our 
national  coin  was  rather  a  shock  to  my  patriotic 
sentiments,  as,  however  we  may  depreciate  our  country 

50 


amongst  ourselves,  we  are  imbued  with  a  very  pug- 
nacious feeling  on  its  behalf  when  abroad ;  but  I  was 
content  to  leave  with  the  consolation  that  if  I  could 
only  carry  out  similar  financial  transactions  ad  infini- 
tum,  I  might  possibly  by  the  end  of  my  tour  become 
a  rich  man.  Nevertheless  it  did,  and  still  does, 
seem  singular  that  one  should  have  had  such  liberal 
treatment  in  a  far-away  republic  which  has  always 
had  a  foremost  place  in  all  matters  of  bribery  and 
corruption,  although  I  should  add  for  your  satisfac- 
tion that  the  bank  was  an  Knglish  one,  and  the 
cashier  a  Scotsman. 

Another  of  our  anxieties — which,  again,  how- 
ever,  affects  only  our  foreign  operations — is 
that  of  Taxation.  How  few  of  the  public,  or  even  of 
our  shareholders,  in  scanning  our  annual  accounts, 
realise  that  such  a  material  percentage  of  our  expense 
is  due  to  the  impositions  which  we,  the  trustees  for 
the  provident,  are  compelled  to  pay  to  the  relief  of 
those  improvident  individuals  who  neglect  to  avail 
themselves  of  insurance  protection.  Occasionally, 
especially  in  South  America,  where  hard  cash  is  at 
all  times  the  paramount  desideratum,  this  taxation 
amounts  to  extortion,  and  its  burden  is  so  intolerable 


as  to  make  it  impossible  for  foreign  Companies  to 
remain.  Such  Governments  are  oblivious  to  the 
detrimental  effect  which  this  repression  must  inevitably 
have  upon  the  best  interests  of  their  own  people. 
It  is  like  the  short-sighted  policy  of  Turkey,  which 
has  gone  far  to  ruin  its  own  commerce  by  trying 
to  put  a  duty  upon  every  parcel  of  merchandise 
passing  through  Constantinople,  regardless  of  the 
inevitable  consequence  that  the  merchandise  of  the 
interior  and  of  the  neighbouring  States  must  find  its 
way  to  the  West  by  other  channels. 

If,  through  onerous  taxation,  foreign  Companies 
are  expelled  from  a  country  where  they  have  been 
operating,  it  is  easy  to  see  that  the  inhabitants 
of  that  country  must  either  go  without  protection, 
which  deprivation  cannot  but  have  a  baleful  effect 
upon  their  commerce,  or  they  must  be  dependent 
upon  their  local  resources,  which  are  often  inadequate 
and,  as  at  Chicago  and  Guayaquil,  must  collapse 
with  serious  loss  to  the  community  when  disaster 
arrives.  Protection,  reciprocal  protection — and  for 
those  States  which,  unlike  our  own  great  country, 
cannot  afford  to  do  without  it — is  often  the  essence 
of  political  economy  ;  but  if  it  be  allowed  to  hamper 

52 


trade  and  cripple  competition  it  only  acts  as  a  boome- 
rang and  punishes  the  very  people  whom  it  is  sup- 
posed to  benefit.  In  the  United  States,  the  British 
insurance  company  has  always  found  a  great  open 
field,  generous  and  fair  enough  to  welcome  it  on 
comparatively  equal  terms.  In  many  of  their  trans- 
actions with  this  country  our  friends  across  the  ocean 
have  earned  a  reputation  for  great  cuteness  and 
"having  the  best  of  the  deal."  The  English  in- 
vestor has,  from  time  to  time,  been  of  great  utility 
to  American  syndicates  for  ventures  which  would  be 
regarded  with  derision  if  offered  on  the  spot.  But 
in  our  business  we  have,  on  the  whole,  had  fair 
and  friendly  treatment.  We  have  earned  for  our- 
selves a  name  for  strength  and  rectitude,  and  that 
will  ever  constitute  our  title  to  the  support  of  the 
American  public.  With  our  roots  on  the  other  side 
of  the  Atlantic  so  firmly  planted,  and  possessing  as 
we  do  the  sympathies  of  the  insuring  people  them- 
selves, it  would  be  both  unwise  and  difficult  to  turn 
the  screw  of  prohibitive  protection  on  to  us.  Already 
we  pay  smartly  for  the  privilege  of  running  the 
risks  we  do,  and  facing  the  violent  oscillations  to 
which  our  business  in  America  is  subject ;  and  I 

53 


fancy  that  if  the  extent  of  taxation  to  which  we 
are  subjected  were  better  realised  by  the  public 
themselves,  they  would  see  the  wisdom  of  some 
modification.  If  for  instance,  we  are  taxed  3  per 
cent,  on  our  premiums,  in  a  particular  State,  and 
if,  as  I  have  shown,  a  6  per  cent,  profit  on  an 
average  of  years  is  the  most  we  can  reasonably 
anticipate,  it  follows  that,  at  best,  for  every  £6  we 
make  for  our  shareholders  we  must  pay  £$  to  the 
State.  Indeed,  when  a  tax  is  levied  on  premiums 
and  not  on  profits,  its  incidence  is  not  only  a  serious 
burden,  but  it  must  often  be  paid  when  the  Company 
itself  makes  an  actual  loss.  It  is  a  penalty  on  the 
turnover,  not  on  the  realisation,  and  it  is  therefore 
really  a  tax  on  capital  rather  than  on  income. 
Seeing,  then,  that  the  American  Companies  them- 
selves are  in  many  cases  also  punished  in  the  same 
way,  it  strikes  one  as  curious  that  fire  insurance 
Companies,  operating  as  they  do  in  the  real  interests 
of  the  community  at  large,  should  have  so  long  sub- 
mitted to  impositions  which  would  seem  to  any  other 
commercial  concern  as  illogical  and  impracticable. 
tb*  Selection  But,  apart  altogether  from  the  intricate  details 
Of  Officials.  Of  our  business,  there  is,  for  those  who  have 

54 


risen  to  positions  of  responsibility  and  command, 
the  function — I  may  even  say  the  privilege — preg- 
nant with  consequences,  of  selecting  men  for  other 
positions.  Whether  it  is  the  choice  of  a  new  recruit, 
the  youth  who  may  perhaps  have  in  him  the  makings 
of  the  eventual  manager,  or  of  some  prominent 
official,  the  plenipotentiary  of  the  Company  in  some 
important  place  on  some  serious  mission,  the  same 
care  and  judgment  must  be  exercised  if  the  results 
are  to  justify  the  appropriateness  of  the  selection. 

An  astute  diplomat,  steeped  in  the  arts  and 
intrigues  of  his  life-long  service  under  Monarchy  and 
Directory,  Consulate  and  Empire,  gave  utterance  to 
this  final  reflection :  ' '  That  the  art  of  putting  men 
in  the  right  place  is  first  in  the  science  of  govern- 
ment, but  that  of  finding  places  for  the  discontented 
is  the  most  difficult." 

One  would  almost  suppose  that  Talleyrand  must 
have  had  some  experience  of  the  inside  of  an  insur- 
ance office.  For  it  is  certain  that  the  character  of 
the  appointments  which  we  make  is  of  the  very  first 
importance  in  its  bearing  on  the  subsequent  results, 
and  that,  on  the  other  hand,  it  is  a  frequent  difficulty 
and  anxiety  when  a  vacancy  arises  to  find  exactly 

55 


the  suitable  man  for  the  requisite  position.  Vacancies 
and  new  openings  are  occurring  every  day ;  there  is 
a  large  field  for  enterprising,  qualified  enthusiasts ; 
and,  although  the  vacancy  not  infrequently  arises 
when  the  appropriate  man  is  not  available,  one  may 
always  know  that  the  more  qualifications  one  pos- 
sesses of  combined  tact,  judgment,  and  experience, 
the  greater  the  chance  of  being  selected  for  some 
more  important  position  when  the  opening  actually 
occurs. 

Cbt  faculty  "^  *s  an  axi°m  that,  to  every  man,  whatever 
Of  Observation,  his  business  may  be,  the  faculty  of  observa- 
tion is  of  paramount  utility.  Unless  one  watches 
a  V  what  is  going  on,  observes  the  habits  and  the  strong 
points  of  others,  ready  at  all  times  to  adopt  a  new 
principle  or  to  appreciate  the  effect  of  a  new  light 
cast  upon  an  old  subject,  one's  interest  in  life  is  limited, 
and  the  experience  which  forms  our  capital  is  warped 
and  checked.  ' '  Observation  more  than  books,  experi- 
ence more  than  persons,  are  the  prime  educators." 
We  must  be  taking  mental  notes  all  the  while,  for 
we  never  know  when  the  little  incident,  or  the 
unassuming  bit  of  fact  which  seems  to  have  no  par- 
ticular significance  at  the  time,  may  eventually  be 

56 


the  one  element  to  help  us  to  decide  some  perplexing 
question.  Many  of  you  have  heard  from  the  lips 
of  one  of  our  greatest  underwriters  the  frequent 
dictum  :  '  *  Give  me  an  ounce  of  fact ;  it  is  better  than 
a  ton  of  theory."  And  this  motto,  "  Facia,  non 
verba"  was  not  a  mere  saying  with  him;  he  applied 
it  daily,  seizing  with  avidity  upon  every  scrap  of 
practical  testimony  which  his  comprehensive,  master- 
ful mind  did  not  already  contain. 

And  this  habit  of  observation  can  be  cultivated. 
It  may  be  that  our  horizon  is  limited,  that  we  are 
confined  to  one  department  of  our  business,  or  to 
our  own  immediate  neighbourhood,  or,  at  best,  to 
the  borders  of  our  own  country.  Kven  so,  it  is  rare 
that  a  day  ,will  pass  without  impressing  upon  us  some 
point,  some  new  idea  or  factor  which  we  can  turn 
to  our  advantage. 

Undoubtedly,  however,  the  wider  the  field  the 
greater  the  opportunity.  It  is  an  immense  ad- 
vantage to  have  rubbed  shoulders  with  the  world, 
to  have  had  the  chance  of  studying  the  ways  and 
methods  of  other  countries  and  peoples.  We  are 
called  an  insular  nation.  Many  foreigners — the  French, 
for  example — regard  us  as  a  bundle  of  conceits  and 

57 


prejudices.  And,  even  after  stripping  the  insinuation 
of  its  envy,  there  is  a  great  deal  of  underlying 
truth  about  it.  You  Scotsmen,  who  have  placed  a 
girdle  round  the  globe  and  established  yourselves  in 
every  country  worth  living  in,  know  very  well  the 
signs  of  the  new  arrival,  untra  veiled  and  inex- 
perienced ;  how  he  seems  to  take  it  for  granted  that 
the  world  is  his  oyster,  and  nobody  else's ;  and  that 
his  very  nationality  has  conferred  upon  him  the 
privilege  of  opening  this  oyster  at  his  own  sweet 
will,  regardless  of  those  who  come  in  his  way.  He 
assumes,  as  a  matter  of  course,  that  his  own  lan- 
guage should  be,  and  must  be,  dominant ;  that  it 
should  not  only  carry  him  everywhere,  but  that  if, 
in  his  travels,  he  comes  across  those  who  cannot 
respond  in  English,  it  is  they,  like  Stephenson's 
cow,  and  not  he,  who  must  get  out  of  the  way. 
If  he  has  business  in  hand,  he  follows  the  same 
principle,  and  is  surprised  if  the  foreigner  does  not 
at  once  see  the  superiority  of  the  Englishman's 
methods  to  those  which  he  has  all  his  life  been 
accustomed  to.  There  is  a  beautiful  audacity  about 
all  this,  and  we  cannot  but  admire  it.  Cest  mag- 
nifiqzie,  mats  ce  rf  est  point  la  guerre. 

58 


It  may  make  us  feared  and  admired,  but  it  will 
not  pay.  The  time  has  gone  by  when  we  can 
think  that,  because  we  are  Britons,  we  must  com- 
mand the  market,  and  that  it  is  quite  unnecessary 
for  us  to  adapt  ourselves  to  the  requirements  of  our 
customers ;  that  our  customers  ought,  on  the  con- 
trary, to  be  proud  that  they  are  privileged  to  deal 
with  us.  The  Englishman — insurance  man  or  other- 
wise— must  now  have  all  the  qualifications  and  all 
the  pliability  required  to  compete  on  equal  terms 
with  his  foreign  competitors,  and  must  always  be 
ready  to  observe  and  adopt  their  methods,  when 
those  methods  are  likely  to  aid  him  in  holding  his 
own. 

the  Life  Branch  But  tbere  are  many  of  y°u  present  whose 
interest  and  whose  occupations  are  devoted 
to  other  branches  of  our  great  profession  than  that 
of  fire  insurance,  of  which  alone  I  can  pretend  to 
speak  with  any  confidence ;  and  when  we  put  on 
one  side  the  technicalities  and  the  special  features, 
I  think  we  may  say  that  the  same  broad  principles 
govern  them  all.  And  what  an  infinite  variety  of 
branches  there  are  !  First  and  foremost  are  our 
actuaries,  with  their  elaborate  mathematical  computa- 

59 


tions,  enabling  them  to  forecast  the  future  with  such 
terrible  accuracy.  Of  all  our  departments,  surely  the 
science  of  life  insurance  is  the  most  absolute.  The 
only  real  uncertainty  appears  to  be  the  continuous 
fall  in  the  rate  of  interest,  which  affects  correspond- 
ingly the  yield  of  the  funds  held  in  trust,  and 
consequently  the  complexion  of  future  bonuses,  and 
perhaps,  even,  rates  of  premium. 

And  yet  this,  again,  has  been  offset  by  a  gradual 
improvement  in  the  mortality,  thanks  to  our  greater 
attention  to  sanitation,  and  perhaps  not  less  to  in- 
creased medical  skill. 

After  all,  the  Psalmist's  idea  of  a  reasonable 
time  of  existence  for  a  healthy  male  was  a  pretty 
fair  estimate  of  the  average  human  life  as  we  find 
it  to-day ;  and  year  by  year,  with  the  improvements 
in  our  methods  of  living,  and  of  appliances  to  meet 
and  check  epidemics,  the  fluctuations  in  the  aggregate 
mortality  experience  must  be  very  unimportant. 

Indeed,  to  an  outsider,  it  would  sometimes  seem 
almost  as  if  the  actuary  had  succeeded  in  removing 
his  particular  branch  outside  the  sphere  of  what  is 
generally  understood  as  insurance.  For  the  basis  of 
insurance  is  a  provision  against  chances,  a  scheme  by 

60 


which  the  individual  is  secured  in  the  event  of  the 
unlikely  thing  happening.  But  if  these  chances  can 
be  gauged  with  comparative  accuracy,  the  science 
becomes  a  very  exact  one,  and  the  element  of  chance 
is  largely  removed.  The  fire  risk  may  not  burn,  the 
ship  may  survive  its  risky  vo3^ages  and  at  the  end 
be  broken  up  in  some  secluded  dock,  but  every  one 
of  us  must  die.  The  actuary  can  therefore  pursue  his 
course  placidly  and  studiously,  calculating  to  a  nicety 
the  probabilities,  and  unruffled  by  the  shocks  of  con- 
flagrations and  hurricanes  which  beset  his  confreres. 
Again,  competition  amongst  Life  Companies  has 
led  to  many  novelties,  and  not  only  is  it  possible 
for  both  the  rich  man  and  the  poor  man  to  take 
out  policies  in  accordance  with  their  respective  cir- 
cumstances, whether  under  the  minimum  premium 
system,  or  by  a  limited  number  of  payments,  or  even 
by  a  lump  sum  down,  but  a  very  important  place 
in  L,ife  business  is  now  occupied  by  what  is  simply 
a  method  of  judicious  investment.  If,  for  instance, 
it  is  possible  to  entrust  a  I^ife  Company  with  ^1000, 
on  the  condition  that  at  death  that  sum  is  returned, 
and  that  in  the  interim  an  annuity  at  the  rate  of 
3  per  cent,  be  paid,  that  means  that  the  Company 

61 


is  willing  to  take  the  risk  of  the  double  chance  of 
the  policy-holder  living  or  dying,  and  the  transaction, 
so  far  as  the  individual  is  concerned,  is  really  the 
entrusting  of  so  much  money  on  certain  conditions 
to  a  Company  whose  permanence  and  financial  strength 
remove  from  the  investment  all  likelihood  of  risk  or 
anxiety. 

There  is  no  finality  in  the  mental  occupation  of 
a  lyife  official.  His  schemes  are  legion,  and  each 
new  feature  as  it  is  announced  contains  some  fresh 
variation — some  special  attraction.  With  commuted 
bonuses — endowments — the  adoption  of  the  non-for- 
feiture plan — indisputable  policies — threefold  options — 
the  occasional  waiving  of  medical  examinations — the 
increase  in  surrender  values — our  Life  friends  vie  with 
each  other  in  catering  for  a  wide-awake,  exacting 
public,  always  intent  upon  securing  a  return  of  at 
least  2 is.  for  every  2os.  deposited. 

the  Ittarlnc  The  Marine  underwriter  also  has  his  science, 
Underwriter.  but  it  is  more  closely  allied  to  that  of  his 
Fire  colleague.  With  all  his  skill,  his  results  are 
ever  liable  to  be  affected  by  some  rude  turn  of  the 
wheel  of  Fate.  Marine,  like  Fire,  business  is  the 
essence  of  real  insurance,  protecting  against  accidents, 

62 


probable  and  possible.  The  probabilities  are  easily 
calculated,  but  the  possibilities  are  unlimited,  and 
frequently  tear  into  tatters  the  finest  web  of  care- 
fully thought-out  expectations. 

I  know  it  is  incorrect,  but  there  is  a  general 
impression  that  Marine  business  is  free  from  the 
uncertain  and  disturbing  element  of  moral  hazard 
with  which  our  Fire  officials  have  to  contend.  This 
impression  is  doubtless  due  to  the  fact  that  a  Marine 
policy  is  usually  a  valued  policy,  which  means  that, 
in  the  event  of  total  loss,  the  full  sum  insured  must 
be  paid  without  deduction,  even  if  the  underwriter 
has  reason  to  suspect  that  the  ship  or  the  cargo 
was  not  worth  that  amount.  This  system  is  doubt- 
less indigenous  to  Marine  business,  and  could  not  be 
eradicated  even  if  it  were  expedient  to  do  so,  but, 
with  us,  a  valued  policy  is  regarded  as  heterodox 
and  dangerous,  in  that  it  would  take  out  of  our 
hands  almost  the  only  check  which  we  possess 
against  the  wiles  of  fraudulent  clients.  Another 
difference  between  us  is  that,  very  often,  a  Marine 
underwriter  can  anticipate  and  hedge  a  loss  by  re- 
insuring, and  it  must  often  be  a  pleasurable  relief 
to  his  daily  anxieties  to  watch  the  rate  of  a  ship 

63 


which,  when  first  reported  as  overdue  he  has  re- 
insured at  5  guineas  per  cent.,  mounting  up  to  20, 
50,  80  guineas,  until  at  last  all  hope  of  the  vessel 
ever  arriving  is  abandoned.  The  keenness  of  com- 
petition— the  difficulties  of  combination — the  tempta- 
tions to  include  in  a  Marine  policy  Fire  and  other 
risks  which  rival  underwriters,  and  specially  Lloyd's, 
may  have  included — the  numberless  interpretations 
placed  upon  that  hardy  definition  "particular  aver- 
age"— the  intricacies  of  Marine  Insurance  law  which 
has  now  such  a  bearing  upon  so  many  commercial 
and  shipping  transactions — all  lend  to  the  life  of  the 
underwriter  the  necessary  variety  and  zest,  and  afford 
?cope  for  the  enquiring,  penetrating  mind. 
bC  Unlimited  SCODC  And  what  shall  I  say  of  the  many  other 
Of  OW  Profession,  branches  of  our  profession,  each  having  in 
view  the  protection  of  the  individual  against  some 
chance  or  contingency  of  which  he  does  not  care  to 
run  the  risk  himself? 

'His  person,  his  well-being,  his  property,  his 
probity,  his  liabilities  to  others,  can  all  be  provided 
for :  accidents,  sickness,  storms,  burglary,  boilers, 
live-stock,  plate-glass,  mortgage,  fidelity,  employers' 
liability,  commissions  and  profits — insurance  safeguards 


of  every  kind  and  variety,  growing  in  number  and 
in  significance  every  day,  to  meet  the  increasing 
necessities  and  fancies  of  a  public  which,  in  this 
advanced  age,  has  become  accustomed  to  employ 
every  accessory  calculated  to  add  to  its  security  and 
comfort. 

It  would  assuredly  be  a  rash  thing  to  attempt 
to  define  the  limits  of  our  many-sided  profession, 
for  it  has  no  bounds.  If  the  expansion  and  the 
novelties  of  the  last  twenty  years  are  any  criterion, 
what  may  we  expect  of  the  future?  Looking  back, 
we  see  a  widening  road  tramped  down  by  the  feet 
of  an  ever-growing  army  of  workers  led  by  many  a 
general  who  has  spent  the  best  of  his  life  in  the 
service  of  his  Company,  and  whose  achievements 
prove  how  much  can  be  attained  by  persistent  well- 
directed  enthusiasm.  Booking  forward,  we  see  a 
vista  reaching  to  the  horizon,  replete  with  endless 
possibilities.  L,ike  the  Alpine  climber,  no  sooner 
have  we  attained  the  summit  of  the  height  which 
we  think  is  our  goal,  than  we  see  another  range 
beyond,  still  higher  and  equally  alluring.  As  it  is, 
our  business  is  full  of  charm  and  fascination,  and 
it  is  none  the  less  so  because  we  cannot  penetrate 

65 


into  the  developments  and  the  destinies  of  the  future. 
Assuredly,  there  are  still 

"more  things  in  heaven  and  earth 
Than   are  dreamt  of  in   our  philosophy." 

We  have  always  something  ahead  of  us  to  beckon 
us  on,  and  we  have  the  ceaseless  incentive  to  learn 
all  we  can  and  to  do  the  fullest  justice  to  our 
powers,  for  we  never  know  but  what  some  particular 
forte  or  acquisition  which  has  been  lying  dormant 
for  years  may  be  called  suddenly  into  play.  Your 
own  Scotch  proverb  says :  ' '  Keep  a  thing  seven 
years,  and  you  find  a  use  for  it." 

VJ  And  so  with  our  qualifications.  We  must  observe 
and  we  must  practise ;  we  must  store  up  the  accu- 
mulated atoms  of  our  daily  experience,  and  keep 
them  against  the  day  when  they  may  be  wanted. 
We  must  persevere,  and  we  must  be  philosophical — 
not  with  that  hesitating,  sceptical  philosophy  which 
Keats  said  would 

"Clip  the   wings  of  an  angel," 

but  the  philosophy  which  will  keep  us  calm  and 
unruffled  in  the  time  of  trouble,  and  even  still  more 
so  in  the  hour  of  our  brilliant  prosperity. 

66 


And  thus,  going  through  life  with  eyes  and 
ears  open,  eager  to  receive,  and  ready  to  assimilate, 
the  thousand  impressions  and  experiences  which  sur- 
round us,  we  shall  add  to  our  store  of  knowledge 
and  to  the  many  qualities  which  are  likely  to  help 
us  in  our  strivings  for  success. 


Or 


67 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 

AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.OO  ON  THE  SEVENTH  DAY 


OVEO*F-SS  IMS 

SEPSJJ  W35 

^RTDl-D 

ero  9ft  1S59 

OGT  27  1935 

Sfcr  ^°  *^ 

OC1      • 

•, 

DEC  101946 

I 

I 

-\  \  V     - 

:  n»  s 

rg 

5^prs®tft 

'^v^^/ 

LD  21-100m-7,'33 

Q 


